Are You Letting FOMO Ruin Your Finances?

Back in the pre-social media dark ages, I had a friend who would spend every night out on his cell phone, trying to determine if there was a better event going on, so that he could make sure he was having the maximum amount of fun possible. He remains my benchmark for fear of missing out, or FOMO, since I have never met anyone before or since who was so worried about missing out on something more fun than what he was doing at that particular moment.

This friend relocated prior to the advent of social media, so I don't know how he has adapted to the rise of FOMO as a lifestyle via Facebook envy (although I do worry that his head has exploded). But sadly, he is no longer an anomaly.

Now that we live our entire lives on social media, recording everything from lavish vacations to delicious meals for posterity, FOMO has infected an entire generation. While FOMO can push you to live a fun and spontaneous life, it is more likely to make you overspend — without actually increasing your enjoyment.

FOMO doesn't have to ruin your finances or your evenings out. Here's what you need to know about keeping your fear of missing out from breaking your budget (or annoying your friends).

How FOMO Can Ruin Your Finances

FOMO is a relatively simple concept — it is the social anxiety that we might lose out on something more awesome than what we are already doing or already have. In other words, choosing any one option costs you the alternatives that you could have chosen. Economists, rather than calling this by its cool acronym, refer to this concept as "opportunity cost."

What makes FOMO/opportunity cost so insidious is the fact that you can easily forget what partaking in any fun activity will cost. For instance, when you are drooling over your friends' Instagrammed brunch photos while eating a bowl of Cheerios in your bathrobe, you tend to focus on how much fun they are having and how delicious the free-range gluten-free French toast looks, rather than the fact that they have probably blown $45 on lunch. (See also: 10 Things to Stop Doing on Social Media by 30)

Here are some other sneaky ways FOMO can break your budget.

1. Experiences

This is the classic FOMO expense. You spend money going out with friends, rather than finding cheap or free ways to have fun together. Fear of missing out on experiences can be even more devastating to a budget if there is an income disparity among a group of friends. It's very easy to spend money to keep up with your richest friend, rather than suggest cheaper alternatives or face the prospect of spending the evening with Netflix and a frozen burrito.

2. The Latest Gadget

The folks who line up overnight in order to be the first to score an iPhone 3.1415s are not camping out because they are convinced that the slightly improved product is going to change their lives — rather, they are afraid of what they will miss out on if they do not upgrade.

Technology seems to change at light speed these days, and not only do we fear missing out on cool new features, but we also fear becoming the luddite who doesn't even know how to use a phone to summon nearby unicorns. (That's what Uber does, right?)

3. Time

There is an incredible time cost to FOMO, since it often leads to constant checking for updates. If you are doing this on your own time, it may not cost you money per se, but it can certainly harm your relationships (as I hope my friend eventually learned).

But who hasn't checked Facebook or Twitter at work — or when they should have been studying? Loss of productive time because you are afraid of missing something can be incredibly costly.

4. Investments

Believe it or not, investors are often bitten by the FOMO bug. Generally, this happens when a particular investment or sector is going gangbusters, and investors are afraid of missing out on big money. Of course, FOMO is often what leads to bubbles, such as the housing crash of 2008. You may recall the number of people who got into home flipping prior to the crash — who were then left holding the bag after the bubble burst.

Breaking FOMO's Hold on Your Wallet

While there is no way to completely turn off FOMO, there are several ways to lessen the effect enough to stay on budget.

5. Schedule Fun Ahead of Time

FOMO is most likely to strike if you find yourself on Friday afternoon staring down an empty weekend. Not only is that a bad time to make plans for logistical reasons, but it is also a good way to get stuck in my friend's trap, where he would spend all of his "fun" time trying to find something more fun to do.

Instead, schedule your fun ahead of time. Not only will you not be tempted by last-minute invitations, but you will also enjoy your planned outing even more than a spontaneous one. According to psychologists who study the science of happiness, we feel an extra boost of pleasure when we consciously delay enjoyment. So looking forward to your board game night or your weekend camping trip will add to the pleasure of those events — which is something the last-minute invitation to the lavish party can't offer.

6. Take a Social Media Fast

The big surge in the feeling of FOMO is due to the rise of social media. Back when you heard about the awesome party after the fact, or only learned of your old roommate's incredible vacation to Hawaii when you randomly ran into him at the store, there was no time for you to worry about missing out on their awesome experiences.

These days, we know about things in real time, and it can make us feel everything from envy to regret to dissatisfaction with our own lives. In fact, according to a 2013 study, the more people use Facebook, the worse they feel after logging off.

Turning off the social media — whether for a couple of hours, days, or weeks — can do wonders for making you feel better about your own life. For starters, you won't be able to compare your regular life to the polished version of your friends' lives online. In addition, we often check social media due to boredom, and taking a break from your feeds can prompt you to get back to the cool hobbies you don't have time for anymore. And nothing kills FOMO faster than working on something you enjoy.

7. Carry Cash

A simple way to fight FOMO in the moment is to make sure you only carry cash on your nights out. The last-minute invitation to the swanky club sounds a lot less tempting if you have to only drink water or stop at the ATM on the way. And having even a moment to think about whether you really want to do something can be enough for your better nature to prevail.

8. Acknowledge the Opportunity Cost

What makes FOMO so devastating is the sense that the stakes are very high. You are not concerned or nervous about missing out — you are afraid of missing the greatest opportunity of all time!!

So it helps to take a moment and really think about what it is that you will miss out on. Acknowledge that there is a cost to missing out on an opportunity and think through all of the ramifications of that cost.

Often, that is enough for you to recognize that the stakes are not nearly as high as you fear. And if you decide you don't want to miss out, it gives you the time to think about how you can afford to partake and what other costs you are willing to pay. For instance, if you absolutely must join your friends for drinks once a week, you could decide to forgo your daily latte to pay for it.

FOMO might be the 21st century acronym for the phenomenon, but human beings have always struggled with concerns about the grass being greener on the other side. Embracing the opportunities you do take is the key to breaking FOMO's grip on your life and your finances.

Do you experience FOMO? How do you deal with it? Share with us in the comments!

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Katasha #1

Oh, man - FOMO is so lame! I once had a boyfriend who was similar to your friend, always trying to find the bigger, better deal. Finally, I started saying to him, "THIS IS IT! This is where the party's at! F*cking enjoy it already! " I hope he finally gets it now.

I used to get mild FOMO, but usually that means I just need a social media fast. What has really been a problem for me lately is when *other* friends get FOMO and try to guilt me into joining them. UGH, I've wasted so much money to peer pressure.